Dubai renters hoping for a slowdown in rent growth in the second half of 2023 are unlikely to get their wish. New and renewed leases are allowing landlords to offer higher prices in the coming weeks, whether it's a home in the palm of your hand or a newly delivered home in a mid-sized Arjan condo. will receive.

Average rents across Dubai rose by 24.2% in the 12 months to the end of May, according to a survey by real estate consultancy CBRE. 

Affordable locations are catching up

Meanwhile, Dubai's existing and emerging residential areas have all recorded double-digit increases in rents and property values. Take Dubai South, for example. Rents and property values remained stable in 2021 as Dubai's famous tourist destinations such as Marina, Downtown and The Palm increased.

 but this is no longer the case. “In Dubai South, rent growth (up 15%) in the 12 months to to June have been far outstripped by the gains in property values (up 26%), That's because the new apartments and villas are attracting end-users, as are the older developments there."

Rental prices for ready-to-move 2 bedroom apartments in Dubai South range from AED 60,000 to AED 65,000 based on listings on major real estate portals. The ones at Expo Village are costly at over 80,000 dirhams 

Renting still the best option?

The situation in another fast-emerging mid-market residential location – Arjan – shows another dynamic.

Rents are going up more in Arjan even with all the new offplan project launches and recent handovers of completed homes, One would have thought this would dampen rent increases - but it hasn’t. The reason is because it costs more to mortgage a property in Arjan right now than it does to rent there.

An offplan property is selling at Dh1,250 per square foot on average, while that for ready stock in Arjan is around Dh850. (And there aren’t that many ready units available…)

Two-bedroom units in Arjan are currently listing for Dh70,000 and over on average.

Bring back rent-to-own schemes?

In the current market upturn, most developers in Dubai are yet to get serious about offering rent-to-own schemes for their tenants wanting to turn buyers. They may not have a reason to do so as their offplan launches are meeting heavy demand from investors, from here and overseas.

Many of these investors are betting big that rental demand – and rate hikes - in Dubai will continue to hold sway for more time to come. Overseas investor are wanting to buy bulk – about 20 ready apartments at or around Dh 1 million each, Every investor in Dubai real estate has an eye on the city adding to its population base.

But if developers are wanting more end-users, offering rent-to-own schemes is the way to go, insist some market sources.

End-users too need be in developers' focus

More residents in Dubai are convinced they need to buy a home for themselves here, Higher property values and mortgage rates might be a deterrent, which is why they need to be offered payment options such as rent-to-own.

Focussing on investors alone will not add depth to the market. As had happened in 2021 – when the current Dubai property market wave took off – the need is for more end-user buying.

Whether on the Palm or Dubai South, or wherever they get a choice.